Academic journal article Journal of Leadership & Organizational Studies

Taken on Faith? the Impact of Uncertainty, Knowledge Relatedness, and Richness of Information on Entrepreneurial Opportunity Exploitation

Academic journal article Journal of Leadership & Organizational Studies

Taken on Faith? the Impact of Uncertainty, Knowledge Relatedness, and Richness of Information on Entrepreneurial Opportunity Exploitation

Article excerpt

This article develops a theoretical model that suggests that differential levels of uncertainty, knowledge relatedness, and richness of information will have a substantial impact on the decision to engage in entrepreneurship. Effects of the individual differences fear of failure and general self-efficacy are also considered. Using a metric conjoint methodology, respondents are asked to evaluate a series of profiles with different levels of each attribute and then indicate their willingness to invest in an entrepreneurial opportunity. This approach allows for the calculation of main and interaction effects as well as the importance of each factor in the investment decision. Results indicated that all three factors and their interactions play a significant role in the decision to engage in entrepreneurial action. The degree of opportunity-related uncertainty was found to be the most important factor in the decision-making process.

Keywords: entrepreneurial opportunity; opportunity exploitation; cognition; action

Introduction

The defining moment for the entrepreneur is the creation of a new business venture. But, why do some entrepreneurs make the initial decision to exploit an entrepreneurial opportunity while others do not? This seemingly straightforward question has become one of the great puzzles facing the community of entrepreneurship scholars (Shane & Venkataraman, 2000). As such, a number of researchers have attempted to explain differences in opportunity recognition and exploitation as a function of individual personality differences (e.g., Busenitz & Barney, 1997) or through differences in access to knowledge and information (Krueger, 2000). Some scholars have moved beyond the individual to identify the important role environmental factors play in determining who has, and who does not have, access to certain entrepreneurial opportunities (Shane & Venkataraman, 2000). More recently, some theorists have begun to incorporate the nexus of enterprising individuals and favorable environmental conditions into more unified models of entrepreneurship (e.g., Shane, 2000).

A recent example of a more unified theory of entrepreneurship is McMullen and Shepherd's (2006) conceptual model, which argues that theories of opportunity discovery and exploitation should be based on action. More specifically, they stated that "to be an entrepreneur is to act on the possibility that one has identified an opportunity worth pursuing" (p. 132). However, as researchers begin to move to an action-based framework for entrepreneurial opportunities, it becomes clear that very little is known about the factors that influence the entrepreneur's decision to engage in entrepreneurial action. As such, this study adopts an action-based perspective in an effort to explore how opportunity-related variables may influence potential entrepreneurs' willingness to engage in entrepreneurship. To that end, we examine the influence of differential levels of uncertainty, knowledge relatedness, and media richness on potential entrepreneurs' willingness to invest in the creation of a new business venture. We also consider how the individual differences of fear of failure and general self-efficacy might alter the influence of these key opportunity-focused variables on entrepreneurial action.

Uncertainty has been defined by Knight (1921), who argued that the condition exists when the possible outcomes are not known and the probabilities of those outcomes are also ambiguous. Knowledge relatedness has been discussed as the degree to which knowledge that is perceived as necessary to exploit an opportunity is similar to the knowledge already possessed by the potential entrepreneur (Mitchell, 2006). Media richness was defined by Daft and Lengel (1986) as the ability of information to change understanding over the course of a given time period. This means that communications that quickly promotes understanding, such as face-to-face communications, are considered richer. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.